Metals X Limited — Annual Report 2021

Aug 30, 2021

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ABN 25 110 150 005

APPENDIX 4E UNAUDITED PRELIMINARY FINAL REPORT

YEAR ENDING 30 JUNE 2021

Unaudited Preliminary Financial Report – For the year ended 30 June 2021

RESULTS FOR ANNOUNCEMENT TO MARKET

Consolidated	30 June 2021	30 June 2020	Movement	Movement
	$’000	$’000	$’000	%
Revenue from continuingactivities	93,834	73,243	20,591	28.11%
Contingent consideration income(a)	10,250	-	10,250	100.00%
Profit/(loss) from continuing operations (b)	23,979	(12,422)	36,401	n/a
Profit/(loss) from discontinued operations (c)	64,274	(67,918)	132,192	n/a
Net profit/(loss) attributable to members	88,253	(80,340)	168,593	n/a

• (a) Contingent consideration income represents the $10.00 million Mt Gordon copper payment receivable, plus the agreed fee of $0.25 million.

• (b) Profit from continuing operations includes redundancy and restructuring costs of $0.50 million incurred at the Company’s 50% owned Renison Tin Operation ( Renison ), and $0.60 million of corporate redundancies following the sale of its copper asset portfolio ( Copper Assets ) to Cyprium Metals Limited ( Cyprium ).

• (c) Profit from discontinued operations includes $60.00 million consideration ( Consideration Amount ) received from the sale of the Company’s Copper Assets to Cyprium. The Consideration Amount includes $24.00 million cash, four (4) convertible notes with a face value of $9.00 million each, for an aggregate of $36.00 million (refer to (i)) and 40.60 million options to acquire Cyprium shares (refer to (h)).

NET TANGIBLE ASSETS PER SHARE

Consolidated	30 June 2021	30 June 2020
Net tangible assetsper share:	$0.15	$0.06

DIVIDEND INFORMATION

No dividends are proposed, and no dividends were declared or paid during the current or prior period.

RESULTS OF OPERATION

Renison Tin Operation (50% MLX)

	30 June 2021	30 June 2020	Movement	Movement
	$’000	$’000	$’000	%
Revenue from continuingactivities(c)	93,834	73,243	20,591	28.11%
Cost of sales(d)	(75,145)	(70,330)	(4,815)	6.85%
Grossprofit	18,689	2,913	15,776	541.47%

• (d) Revenue is derived from the Company’s 50% interest in Renison. Increased tin sales and tin prices delivered a 28.11% increase in revenue for the year.

• (e) Cost of sales increased by $4.82 million for the year due to the following:

• Royalty expense increased by $2.56 million to $3.96 million (2020: $1.40 million);

• Plant and equipment depreciation increased by $0.55 million to $3.78 million (2020: $3.23 million); and

• Employee costs increased by $1.19 million to $14.22 million (2020: $13.03 million). The cost increase includes redundancy and restructuring costs of $0.50 million and the increase in onsite personnel.

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Unaudited Preliminary Financial Report – For the year ended 30 June 2021

Production performance summary for the Renison Tin Operation (50% MLX)

Physicals	Unit	30 Jun 2021	30 Jun 2020	Movement	Movement %
UG ore mined	t	405,379	424,453	(19,074)	(4.49%)
UGgrade mined	% Sn	1.30%	1.18%	0.12%	10.17%
Oreprocessed*	t	326,750	344,591	(17,841)	(5.18%)
Headgrade*	% Sn	1.59%	1.42%	0.17%	11.97%
Recovery	%	76.48%	73.56%	2.92%	3.97%
Tinproduced	t	3,974	3,591	383	10.67%
Tin sold	t	3,658	3,412	246	7.21%

CONSOLIDATED FINANCIAL POSITION

Consolidated	30 June 2021	30 June 2020	Movement	Movement
	$’000	$’000	$’000	%
Cash and cash equivalents:	13,472	14,095	(623)	(4.42%)
Trade and other receivables(e)	23,788	6,153	17,635	286.61%
Assets and liabilities classified as held for sale (f)	4,605	-	4,605	n/a
Financial assets at fair value through profit or loss (g)	5,393	-	5,393	n/a
Loan receivable(h)	38,301	-	38,301	n/a
Provisions(i)	15,987	55,077	(39,090)	(70.97%)
Interest bearingliabilities(j)	20,048	35,576	(15,528)	(43.65%)
Net assets	139,700	51,791	87,909	169.74%

• (f) Trade and other receivables include tin receivables of $9.15 million and $11.00 million for the Mt Gordon copper payment.

• (g) On 25 May 2021, the Company announced the sale and spin out of its Nickel asset portfolio ( Nickel Assets ), including the Wingellina and the Claude Hills Projects, to NICO Resources Limited. At 30 June 2021, the Company reclassified the assets and liabilities comprising its Nickel Assets as held for sale on the basis that:

• The Nickel Assets are available for immediate sale in their present condition; and

• it is highly probable that their carrying value will be recovered primarily through sale rather than through continuing use.

• (h) Financial assets at fair value through profit or loss represents the fair value attributed to 40.60 million options to acquire shares in Cyprium, received as part consideration for the sale of the Copper Assets. The Company uses the Black Scholes valuation model to determine the fair value of the options, with fair value movements recognised through profit or loss.

• (i) The loan receivable represents the fair value attributed to four (4) convertible notes with a face value of $9.00 million each, for an aggregate of $36.00 million. The convertible notes are subject to a 4% annual coupon to be capitalised and paid annually, payable in cash unless the Company elects to receive the interest in fully paid ordinary Cyprium shares. The Company estimates the fair value of the right to receive the $36.00 million cash using discounted cash flow techniques and market interest rates. The Company also adds the fair value of the conversion option, which is estimated using the Black Scholes valuation model. Fair value movements in the conversion option are recognised through profit or loss.

• (j) The Groups rehabilitation liabilities have decreased following the disposal of the Copper Assets.

• (k) On 14 April 2021, the Company repaid $15.50 million, representing 50% of the outstanding principal amount of its unsecured $31.00 million finance facility with Asia Cheer Trading Limited ( ACT ). As at 30 June 2021, the ACT Loan of $15.50 million remains outstanding plus the interest accrued.

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Unaudited Preliminary Financial Report – For the year ended 30 June 2021

CHANGE IN CONTROL

Sale of Copper Assets

On 31 March 2021, the Company announced the sale of its Copper Asset portfolio to Cyprium had completed resulting in a loss of control in Paterson Copper Pty Ltd, which holds the Copper Assets through its two 100%-owned subsidiaries Nifty Copper Pty Ltd and Maroochydore Copper Pty Ltd ( Disposal Group ).

All assets, liabilities, income, and expenses of the Disposal Group are included in the Statement of Comprehensive Income until 31 March 2021, being the date control ceased. At 31 March 2021, the Company recognised a gain on sale of its Copper Assets of $64.30 million.

SIGNIFICANT EVENTS AFTER THE BALANCE DATE

Receipt of Mt Gordon Copper Payment

On 8 July 2021, the Company received $11.00 million as settlement of the conditional copper price payment pursuant to the Mt Gordon Sale Agreement, and subsequent binding variation agreement, with Capricorn Copper Holdings Pty Ltd ( CCH ) and its parent entity, EMR Capital Investment (No. 6B) Pte Ltd. The payment from CCH includes the first and second instalments of $5.00 million each, the agreed extension fee of $0.250, and interest due of $0.75 million, being a total payment of $11.00 million.

ACT Finance Facility

On 13 July 2021, the Company repaid a further $7.75 million, comprising 50% of the outstanding principal amount of $15.50 million on its finance facility with ACT.

On 27 July 2021, the Company announced it had agreed to extend the facility termination date from 31 July 2021 to 31 January 2022, all other terms and conditions remaining unchanged.

There have been no further changes to the facility since that date.

AUDIT

This preliminary financial report is based on accounts which are in the process of being audited. No disputes or qualifications are likely to occur.

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Unaudited Preliminary Financial Report – For the year ended 30 June 2021

Consolidated Statement of Comprehensive Income for the year ended 30 June 2021

Continuing operations Revenue Cost of sales Gross profit Contingent consideration income Interest income Other income General and administrative expenses Commodity and foreign exchange (loss)/gain Finance costs Fair value change in financial assets Share-based reversal/(payments) Change in rehabilitation provision estimate Profit before tax Income tax expense Profit/(loss) for the period from continuing operations Discontinued operations Profit/(loss) for the period from discontinued operations Profit/(loss) attributable to: Members of the parent Total comprehensive income/(loss) attributable to: Members of the parent Earnings and diluted earnings/(loss) per share attributable to the ordinary equity holders of the parent (cents per share) from continuing operations from discontinued operations Total	2021 $'000 2020 $'000
	93,834 73,243 (75,145) (70,330)
	18,689 2,913 10,250 - 1,886 448 59 - (5,775) (6,383) (1,866) 673 (2,999) (1,494) 3,991 (83) 344 (137) - (8,360)
	23,979 (12,422) - -
	23,979 (12,422)
	64,274 (67,918)
	88,253 (80,340)
	88,253 (80,340)
	2.64 (1.46) 7.08 (7.99)
	9.73 (9.45)

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Unaudited Preliminary Financial Report – For the year ended 30 June 2021

Consolidated Statement of Financial Position as at 30 June 2021

Current assets Cash and cash equivalents Trade and other receivables Inventories Prepayments Assets classified as held for sale Financial assets at fair value through profit or loss Derivative financial instruments Total current assets Non-current assets Other receivables Convertible note receivable Financial assets at fair value through profit or loss Property, plant, and equipment Mine properties and development costs Exploration and evaluation Total non-current assets Total assets Current liabilities Trade and other payables Liabilities directly associated with assets classified as held for sale Provisions Interest bearing liabilities Total current liabilities Non-current liabilities Provisions Interest bearing liabilities Total non-current liabilities Total liabilities Net assets Equity Issued capital Accumulated losses Share based payments reserve Total equity		2021 2020
		$'000 $'000
		13,472 14,095 23,788 6,153 20,526 20,328 568 885 4,648 - 2,332 - - 1,532
		65,334 42,993
		3,457 9,978 38,301 - 3,091 50 36,847 43,315 37,071 39,633 352 13,993
		119,119 106,969
		184,454 **149,962 **
		8,675 7,518 43 - 3,531 3,680 17,364 33,108
		29,613 44,306
		12,456 51,397 2,684 2,468
		15,140 53,865
		44,753 98,171
		139,700 **51,791 **
		332,406 332,406 (220,543) (308,796) 27,837 28,181
		139,700 **51,791 **

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Unaudited Preliminary Financial Report – For the year ended 30 June 2021

Consolidated Statement of Cash Flows for the Year Ended 30 June 2021

Cash flows from operating activities Receipts from customers Payments to suppliers and employees Interest received Other receipts Interest paid Net cash flows from/(used in) operating activities Cash flows from investing activities Payments for property, plant, and equipment Payments for mine properties and development Payments for exploration and evaluation Payments for other financial assets Proceeds from sale of financial assets Proceeds from disposal of subsidiary Proceeds from sale of property plant and equipment Proceeds from performance bond facility Net cash flows from/(used in) investing activities Cash flows from financing activities Repayment of borrowings Payment of lease and hire purchase liabilities Payments for share issue costs Payments for dividends Proceeds from borrowings Proceeds from share issue Net cash flows (used in)/from financing activities Net (decrease)/increase in cash and cash equivalents Cash at the beginning of the year Cash and cash equivalents at the end of the year	2021 $'000 2020 $'000
	86,165 147,468 (73,875) (167,549) 82 441 133 230 (3,023) (1,633)
	9,482 (21,043)
	(12,618) (10,405) (8,500) (18,230) (1,549) (3,919) (30) 78 155 24,000 - 2,018 319 6,520 795
	9,919 (31,285)
	(47,985) (4,814) (3,039) (5,369) - (2,330) - (58) 31,000 34,899 - 32,731
	(20,024) 55,059
	(623) 2,731 14,095 11,364
	13,472 14,095

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Unaudited Preliminary Financial Report – For the year ended 30 June 2021

Consolidated Statement of Changes in Equity for the Year Ended 30 June 2021

At 1 July 2019 Loss for the period Other comprehensive income, net of tax Total comprehensive loss for the period Transactions with owners in their capacity as owners Issue of share capital Share issue costs Share-based payments At 30 June 2020 At 1 July 2020 Profit for the period Other comprehensive income, net of tax Total comprehensive profit for the period Transactions with owners in their capacity as owners Share-based payments At 30 June 2021	Issued capital Accumulated losses Share based payments reserve Total Equity $'000 $'000 $'000 $'000
	302,005 (228,456) 28,044 101,593 - (80,340) - (80,340) - - - -
	- (80,340) - (80,340) 32,731 - - 32,731 (2,330) - - (2,330) - - 137 137
	332,406 (308,796) 28,181 51,791
	332,406 (308,796) 28,181 51,791 - 88,253 - 88,253 - - - -
	- 88,253 - 88,253 - - (344) (344)
	332,406 (220,543) 27,837 139,700

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Unaudited Preliminary Financial Report – For the year ended 30 June 2021

NOTE 1. BASIS OF PREPARATION

The financial information included in this document for the year ended 30 June 2021 is unaudited. The financial information does not constitute the Consolidated Entity’s full financial statements for the year ended 30 June 2021, which will be approved by the Board, reported on by the Auditors and lodged with the ASX. The Consolidated Entity’s full financial statements will be prepared in accordance with the requirements of the Corporations Act 2001, Australian Accounting Standards, and other authoritative pronouncements of the Australian Accounting Standards Board (the AASB ).

The financial information in this document for the year ended 30 June 2021 has been prepared on the basis of accounting policies and methods of computation consistent with those applied in the 30 June 2020 financial statements contained within the 2020 Annual Report of the Consolidated Entity. As required and unless stated otherwise, comparative financial information for the Consolidated Entity has been presented for the 2020 financial year. Comparative figures have been prepared on the same basis as the current year figures.

The amounts contained in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated (where rounding is applicable) under the option available to the Consolidated Entity under ASIC Corporations (Rounding in Financial Report) Instrument 2016/191.

The Consolidated Entity has adopted all of the new and revised Standards and Interpretations issued by the AASB that are relevant to its operations and effective for the current year.

NOTE 2. SEGMENT NOTE

The Consolidated Entity has only one material segment, which is the Renison Tin Operation (50% MLX). This segment mines, treats, and markets tin concentrate.

NOTE 3. EARNINGS PER SHARE

For basic and diluted earnings/(loss) per share: Profit/(loss) attributable to continuing operations ($’000) Weighted average number of ordinary shares outstanding during the period used in the calculation of basic and diluted earnings/(loss) per share Basic and diluted earnings/(loss) per share (cents) from continuing operations from discontinued operations Total	2021 2020 23,979 (12,422)
	907,266,067 849,817,790
	2.64 (1.46) 7.08 (7.99)
	9.73 (9.45)

NOTE 4. INTEREST IN JOINT OPERATIONS

Renison Tin Project

Subsidiary Bluestone Mines Tasmania Pty Ltd has a 50% interest and participating share in the Renison Tin Project, which is operated and managed by Bluestone Mines Tasmania Joint Venture Pty Ltd. The Consolidated Entity is entitled to 50% of the production. The Renison Tin Project is located in Tasmania.

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